"The concern in the near term is that, since the economic data is picking up steam, the Fed could pull back as soon as January," Young said.
On Thursday, investors will consider an updated report on U.S. economic growth. Economists expect the economy expanded at a 3.2 percent annual rate last quarter.
A key worry for investors is how willing U.S. consumers are to spend during the holiday shopping season, which is just getting underway.
A record number of people shopped over the four-day Thanksgiving weekend, the National Retail Federation said Monday. However, the average amount spent by each shopper fell compared with the same period last year. It was the first decline since the trade group began tracking the figures in 2006.
In the municipal bond market, where cities and states go to borrow money, attention was focused on a ruling that allowed Detroit to enter bankruptcy to relieve its crushing debt. Detroit is the largest public bankruptcy in U.S. history.
Tuesday's ruling was widely expected, so it had little immediate impact on the market, said Patrick Stoffel, a municipal analyst at Wells Fargo Advisors.
More crucial for the wider market will be how the judge rules on the city's plan for exiting bankruptcy, he said. A ruling that allows the city to repay only a fraction to the holders of its so-called general obligation debt could push up borrowing costs for cities in the future.
In company news:
Yum Brands fell $2.10, or 3 percent, to $75.61. The owner of KFC and Taco Bell said sales in China, a key market for the company, have been sluggish because of concerns among Chinese customers about food safety.
Abercrombie & Fitch rose $1.97, or 6 percent, to $35.99. The stock of the teen clothing store owner rose after an activist shareholder, Engaged Capital, sent a letter to the company demanding that CEO Michael Jeffries be replaced.